DMO denies involvement in NNPC’s plan to borrow $1.5b

THE Debt Management Office (DMO)has washed its hands off the attempt by the Nigerian National Petroleum Corporation (NNPC) to borrow $1.5 billion to pay off its debts.

Sources at the DMO told The Nation that NNPC did not consult nor inform it of its intention to borrow.

Several sources at the DMO expressed dismay with the corporation’s plan.

“The money NNPC wants to borrow is not captured in the medium term economic framework,”one of the sources at the DMO said.

The attempt by the NNPC to borrow the $1.5 billion, he said, can rubbish the Medium Term Economic Framework that was submitted to the National Assembly last year and which generated a lot of controversy.

Another source said: “NNPC must seek the permission of the National Assembly before it can engage in any external borrowing. The $1.5 billion the NNPC wants to borrow is not included in the money the National Assembly has approved from the Medium Term Economic Framework of 2012.

“If NNPC wants to borrow money externally, it should be included in government’s borrowing plan. That is why state governments come to defend their borrowing before the National Assembly.”

The DMO officials, who spoke to The Nation, lamented that by attempting to borrow the $1.5 billion, “NNPC wants to be a nation unto itself, and it did not even consult the DMO either for advice or permission before going ahead with the idea to borrow the money.”

When contacted, the Ministry of Finance offered no explanation on the matter.

A former World Bank Vice President, Dr. Oby Ezekwesili, had warned that the $1.5billion loan amounted to financial recklessness and lack of transparency in the NNPC, warning that it should not be allowed to continue.

“This level of elite parasitism that has been the hallmark of our oil sector is fatal. It’s unsustainable,” the former Minister of Education and one-time chair of the Nigeria Extractive Industries Transparency Initiative (NEITI), said.

She blamed the Federal Government for allowing what she termed “Federal Republic of NNPC”, wondering: “Why does this administration encourage the idea of a “Federal Republic of NNPC in a Democratic Nigeria in 2013?”

Human rights lawyer, Femi Falana (SAN), faulted the decision on legal grounds. He said: “The decision of the NNPC to take a loan of $1.5 billion is illegal and unconstitutional. The Federal Government or any of its agencies has no right to take local or foreign loans without the approval of the National Assembly. Section Six of the NNPC Act, which empowers it to borrow money with the approval of the Federal Executive Council, has to be read subject to the powers of the National Assembly before taking such loans.”

But Managing Director, Financial Derivatives Company (FDC), Mr Bismark Rewane, justified the NNPC’s borrowing, arguing that if the NNPC failed to honour its obligations for offshore processing transactions, it would affect the country’s international credit rating.

“If the NNPC does not borrow and pay its foreign creditors, our (Nigeria’s) credit rating will go down and this is not good for our financial institutions and the country,” he said.